Deliveroo boss says 'weight of inflation' is easing after takeaway costs soared
The boss of Deliveroo has said that the "weight of inflation" is starting to reduce, after the company revealed that higher food prices helped drive up average takeaway spending.
Will Shu, the platform's founder and chief executive, said some consumers started viewing food delivery as non-essential when the cost-of-living crisis worsened.
He said: "At the end of the day, what happened last year and at the tail end of 2022 is that things got unaffordable for certain segments of consumers. They want food delivery, but what was a regular way of living their lives became somewhat discretionary."
Food inflation was outpacing wage inflation by about two to one, which squeezed consumer spending power, he said. But he said "the weight of inflation is coming down and it is now getting closer to parity with wage inflation", which would be "positive" for the group.
Meanwhile, Mr Shu said Deliveroo has not been affected by delivery riders going on strike in recent weeks over pay and working conditions. He said the strikes were sector-wide, adding: "We think the vast majority of riders worked and wanted to work, therefore we experienced minimal impact."
Shop prices 'are yet to peak and will remain high' as inflation hits new heights
But he stressed that the company takes "very seriously" any issues raised by riders. "We have a rider engagement team, we meet with riders in person, we also work with the GNB Union to make sure riders have a formal voice in the company," he said.
The takeaway giant, which operates in 10 countries and works with around 135,000 riders across the world, has faced court battles over the employment status and rights of its riders. In the UK, the Supreme Court ruled last year that riders are not employees of Deliveroo, and therefore are not workers entitled to trade union rights such as collective bargaining.
Meanwhile, the 'Deliveroo Shopping' feature was launched in November, with the app partnering with major retailers to deliver items across categories including pharmacy, toys and petcare. Mr Shu said the most popular items since the feature launched include dog treats, soy wax candles, and hand cream and soap.
He also revealed that the top-trending cuisines have been American, Mexican and Hawaiian food, while the most popular grocery items ordered through the app were bananas, eggs, and semi-skimmed milk. The group posted a loss of £31.8 million for 2023, significantly smaller than the £294.1 million loss reported for 2022.
It said the number of orders decreased by 3% year-on-year to 290 million. But the annual gross transaction value (GTV), which means the total cost of people's food baskets plus delivery and consumer fees, rose by 3% to £7.1 billion.
The average cost per takeaway order has gone up by 6% from £22.90 to £24.30, due to price inflation and changes in consumer fees last year. The company saw a slightly stronger performance in the UK and Ireland, with the number of orders increasing by 1%, and the total value of goods sold (GTV) rising by 8% compared to last year.
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